Message from NZ

AN unexpected but hugely interesting opportunity for the Club to hear from the New Zealand Minister for Primary Industries, the Hon. Nathan Guy, emerged in late March, with a vibrant group of members and guests enjoying a fascinating evening in the new Farmers Suite.

The evening took the form of the Club’s increasingly popular Monday Evening Lecture series, with attendees meeting in the Hudson Room at 17.30 for tea and coffee, ahead of a lecture at 18.00 followed by a wide-ranging Q&A session until 19.00, with drinks and canapes after.

Mr Guy, whose dairy and beef family farm is near Palmerston North on New Zealand's North Island, has held Ministerial responsibility for Primary Industries since 2009, including pastoral agriculture, horticulture, biosecurity and agricultural exports.

He was accompanied by the very recently installed New Zealand High Commissioner, His Excellency The Right Honourable Lieutenant General Sir Jerry Mateparae, GNZM, QSO, KStJ.

Welcoming Minister Guy and Commissioner Mateparae on the day Prime Minister Theresa May triggered EU Brexit negotiations, through Article 50, Club Chairman Tim Bennett hoped members would hear useful tips, as UK farming looked for new ways of working after two generations of operating within the EU.

Minister Guy did not disappoint. His inspiring vision of farming’s future within a global trading system was delivered with a cheerfully disarming self-deprecation. And beneath the pro-NZ gloss numerous messages resonated deeply with the UK farming audience.

His over-arching message was that dramatic subsidy change could not only be survived, but would drive technical and marketing innovations that would transform the sector. Pursuing premium markets globally, with quality products and well-explained provenance, was the key to profitability.

He reflected on a two-year working holiday in the UK in the late 1980s, when he spent time near Paignton in Devon and also shearing sheep in Scotland, including black-faced rams with “horns like Honda handlebars”.

More strikingly he recollected a visit to Smithfield meat market at the time, where he saw carcases of NZ lamb stacked high on old-fashioned wooden gurneys. “When a carcase fell off, onto the saw-dust covered concrete floor, I was fascinated to see what would happen. It was casually brushed off and returned to the gurney! How things have been transformed in a very short period of time.”

Since New Zealand’s over-night plunge into subsidy-free farming in 1984 the country’s agriculture had also been transformed, and continued to change very rapidly, driven by a clearly articulated Government policy.

“It’s 132 years since the first shipment of New Zealand frozen lamb to the UK. Back then New Zealand was the UK’s farm. The Common Market changed all that, and then when subsidies came off almost over-night in 1984 it was a massive impact. But farmers didn’t all leave. One percent had left the land by the late 1980s; we had anticipated 10%. And land values rebounded as it was seen that adding value to farm products was better than chasing volume.

“It was a really difficult period, and painful, but no-one would want to go back to how it was. Now we’re one of the most efficient producers of protein in the world and thirsty for new information.”

With farmers averaging 58 years-old, like the UK, younger farmers were crucial. “We have some very successful share-farming, especially around dairy farms, moving from 19-20% of the milk cheque for doing the milking, to a 50:50 split where cows are provided.” Joint venture beef and sheep enterprises were also growing. “It’s not about owning land, but owning a share in the farming business.”

But challenges continued, not least in securing trade agreements, addressing climate change issues and cutting farming’s impact on water quality.

On a historic day, as the UK triggered negotiations to quit the EU, Mr Guy had just come from a day of negotiating a free trade agreement to give New Zealand better access to the EU. It was one of just six members of the World Trade Organisation without such an agreement. 56 countries already had one.

NZ farm products currently face EU import tariffs averaging 31%. But after years of work that looked set to end. He acknowledged the UK’s strong support for the process and noted that New Zealand aimed to secure free trade agreements for 90% of all its exports by 2030. It has reached 52% so far.

US President Trump’s withdrawl from the Trans-Pacific Partnership (T-TIP) was a blow, after nine years of effort, but despite the huge importance of the US market, Mr Guy was hopeful the deal could be resurrected with other participants, including Japan.

Negotiations were on-going with the Gulf states, India and a better deal with China, he said. And “UK Trade Minister Liam Fox says trade deals with Australia and New Zealand are early priorities, but that’s going to take a year or two to get started, because we can’t really negotiate until the UK’s position is clearer.”

Mr Guy said he had had a “very constructive” meeting with Defra Secretary Andrea Leadsom. He felt she saw opportunities to incentivise farmers better than under the current CAP regime, particularly given that for each £1 paid in support farmers lost £1 and more. “There is an opportunity to transform the UK industry, through science, innovation, precision farming and smart agriculture,” he noted.

Being more sustainable was key. “We’re lucky, because we grow grass well, but we have also just been kicked by the OECD, on water quality, particularly around E.coli contamination from livestock entering waterways.”

The goal now is to ensure 90% of New Zealand sea water, rivers and lakes is swimmable by 2040, compared to 72% now. That will mean 56,000km of fencing – equivalent to flying from London to Auckland three times. “But our farmers are up for it, because they know that consumers, be they in London, Birmingham or Paignton, are demanding more from all farmers, and not just in terms of schemes like Red Tractor, and Ireland’s Origin Green.”

NZ’s government also had an explicit goal of doubling the value of exports to 2025. “Not volume, we did that in the 1970s and 80s, and it was disastrous. We can’t double from 5 million dairy cows to 10 million, but we can increase sales values by story-telling and exceeding minimum quality standards and being innovative.”

He countered concerns about consumers demanding ever cheaper food, by noting that a global population of 9 billion would require 60-70% more food than now, and targeting the most affluent was the key. New Zealand, with a population of 4.5 million, and 350,000 involved in farming, fed 40 million people. But not any 40 million. The target was the 40 million most affluent. “With a growing middle class of 250 million in China we are very fortunate to have a free trade agreement there.”

He felt the UK and NZ had great opportunity to be ‘prouder’ about their agriculture. “We don’t sell our story as well as we could. Our social licence to operate needs to be addressed – being good stewards of the land, and bringing the community with us. We need to strengthen the public’s connections with farming, to address the urban-rural disconnect, by telling stories better and making people more aware, because consumer choice is going to become much more important.

“With smart-phones consumers will soon be at the farm gate, by simply scanning a bar code, pulling up details of a producer and their explanations of what they do. They’re going to be ranking what they think of them compared with others, and they’re prepared to pay a premium for quality and sustainability.”

Whilst acknowledging that maintaining NZ lamb import quotas was very important, he also suggested that co-operation between UK and NZ food producers could bring mutual benefit. “The challenge is that lamb is not first preference for consumers, so working strategically to give consumers ready-meal packs, because they want meals in 20 minutes, and collaborating on generic promotion, makes sense.”

Mr Guy’s clear strategic vision for the NZ farming industry was a recurring theme. It stemmed from policies based on a process of bottom-up consultation, of which the Land & Water Forum was a prime example. “We went to ‘the whole of New Zealand’ – NGOs, industry, farmers, everyone with an interest in water – and sent them to ‘punch themselves out’ in debate, with a decent chair, he explained. “And from their entrenched positions they got to give for the common cause, and when they’ve almost agreed Government considers the recommendations and creates policy, which is very difficult for anyone to attack given the Forum’s involvement.”

Privately he acknowledged the fragmented nature of the UK farming industry, and UK regional politics, made visionary policy creation in the UK more challenging. But everything he told the Club pointed to the considerable benefits of achieving that.